MR. DAVID GREGORY: This Sunday, Joe Biden is back exclusively on MEET THE PRESS, his first appearance as vice president. Our issues: the pressing agenda at home and abroad. Is the economic stimulus plan living up to the administration's lofty promises? Can the president get health reform this year? And how can the country afford it? Plus, a dangerous foreign landscape; wars in Iraq and Afghanistan, new threats from North Korea and all eyes on the election in Iran. What will the vote mean for America's national security?

Also with us this morning, two reform-minded Republicans. Republican strategist and John McCain's chief strategist during the 2000 presidential campaign, Mike Murphy; and former Congressman Joe Scarborough, host of MSNBC's "Morning Joe" and the author of the new book "The Last Best Hope."

But first, Vice President Joe Biden, welcome back to MEET THE PRESS.

VICE PRES. JOE BIDEN: It's nice to be with you, David.

MR. GREGORY: It's good to have you here. There's a lot going on, let's get right to it. The developing story is Iran. This has been the scene over the weekend in Tehran, street protests turning violent at times, those protesting the fact that Ahmadinejad is still in power, has claimed victory in this presidential race. He spoke to the press this morning, indicating that this was a free and fair election and also was rather belligerent, saying anybody who would attack Iran would come to deeply regret it. Is Mahmoud Ahmadinejad the winner of this election, as you see it?

VICE PRES. BIDEN: Well, you know, we don't have all the details. It sure looks like the way they're suppressing speech, the way they're suppressing crowds, the way in which people are being treated that there's some real doubt about that. I don't think we're in a position to say. It was surprising that the assertion was he won by what, 60-some percent of the vote? And so I think we have to wait and see. But it, it, it didn't seem on its face to be as clear cut as so many...(unintelligible).

MR. GREGORY: Well, what specifically is the administration doing to find out what you need to find out?

VICE PRES. BIDEN: Well, we're, we're doing what every other country is doing. We're doing everything we can in our power with folks that are on the ground, with the press that's left. I know it's being kicked out. Actually going back and taking a look--for example, 70 percent of the vote comes out of the city. That's not Ahmadinejad's strong place. The idea he could get, you know, 68 or whatever percent of the vote...

MR. GREGORY: Right.

VICE PRES. BIDEN: ...and, and in a circumstance like that seems unlikely.

MR. GREGORY: He says it's free and fair. You sound like you have doubts.

VICE PRES. BIDEN: Well, you know, I, I have doubts, but I--we're going to withhold comment until we have a, you know, a thorough review of the whole process and how they react in the aftermath.

MR. GREGORY: A couple of years ago you said the following about Ahmadinejad when you were on the campaign trail: "`Ahmadinejad, the madman, is in competition with mullahs and ayatollahs who think he's overstepped his bounds.' ... Biden called [him] `that wacko guy, the crazy president,' and said he would only be in office for a little more than a year before being `taken out' because he threatened Shia interests." He's proved to be more durable than that, hasn't he?

VICE PRES. BIDEN: Yes.

MR. GREGORY: Why?

VICE PRES. BIDEN: Well, I think because it, it appears as though the supreme leader has decided the alternatives aren't as, aren't as useful. But again, this is--I'm getting a little head of myself here. We have to see what the results were, we have to have an analysis of it. And that'll be being done by not just us...

MR. GREGORY: Right.

VICE PRES. BIDEN: ...by every country in the world. And, and we can make a better judgment then.

MR. GREGORY: You don't want to recognize him as the president of Iran at this stage.

VICE PRES. BIDEN: We have to accept that for the time being. And--but there's an awful lot of question about how this election was run. And we'll see. I mean, we're just waiting to see. We don't have, we don't have enough facts to note--to make a firm judgment.

MR. GREGORY: Even without those facts, the question is whether the belligerence we're seeing from Ahmadinejad is a sign that he is emboldened, that this regime is emboldened, or is it in some way it weakened? How do you see it?

VICE PRES. BIDEN: Well, the question is, is it for domestic consumption or is it for foreign consumption? It's obvious he has some problems right now. Let's assume he won the election fair and square, he still has some problems at home. And so it seems as though he--it--you know, it's hard to say where it's directed. It could just as easily be directed at his domestic critics. And they are, they are real. They're--and they exist.

MR. GREGORY: But this administration went out of its way--the president sent a message directly to the Iranian people; the president made this speech in, in Cairo reframing the relationship with the Muslim world, and yet this is the response from the Iranian people. Or is it?

VICE PRES. BIDEN: Well, well...

MR. GREGORY: Do you think Iran is a democracy?

VICE PRES. BIDEN: No. That's the question, is this the response, is this the accurate response we're getting? Is this the result of the Iranian people's wishes? The hope is that the Iranian people, all their votes have been counted, they've been counted fairly. But look, we just don't know enough, David. It's been less than 24 hours since the polls have closed.

MR. GREGORY: Who runs Iran's nuclear program?

VICE PRES. BIDEN: Well, look, this is a regime, it's not a single person. The supreme leader is, by all accounts, the supreme leader. And so I doubt whether there's anything that can be done without--of consequence, without the supreme leader's sanctioning.

MR. GREGORY: If these results are borne out, if Ahmadinejad remains in power, this administration has said it's willing to engage with Iran. How do you go about doing that?

VICE PRES. BIDEN: Look, talks with Iran are not a reward for good behavior. They're only a consequence if the president makes the judgment it's in the best interest of the United States of America, our national security interests, to talk with the Iranian regime. Our interests are the same before the election as after the election, and that is we want them to cease and desist from seeking a nuclear weapon and having one in its possession, and secondly to stop supporting terror. That's why we've joined with the so-called P5 plus 1. We've laid out to the Iranian regime what it is that we, the P5 plus 1, are prepared to talk about. And, and look, we--if there are talks, we are, you know, it's something that is going to be done with the regime. It's not being done with a single person.

MR. GREGORY: But it sounds conditional. You've waited this long in office, six months, before any level of engagement, now you're still saying...

VICE PRES. BIDEN: No, no, no, no.

MR. GREGORY: ...if a decision is made.

VICE PRES. BIDEN: No, no, no, no, no. Look, look, look.

MR. GREGORY: What causes the decision to go forward?

VICE PRES. BIDEN: Look, the decision has been made to talk. We've, we have put--the P5 plus 1 have laid on the table a proposal to the Iranians saying we are ready to talk. And we've indicated we'll fully participate in that. We're ready to participate, we're ready to talk.

MR. GREGORY: But what's the message? What's the bottom line? Is this president going to be the one who allows Iran to go nuclear, or is he the president who stopped it?

VICE PRES. BIDEN: He's going to be the president that stopped it, God willing. We are not going to allow Iran to go nuclear any more than the rest of the world is going to allow it to go nuclear.

MR. GREGORY: Let me ask you about another flash point this morning, and that is North Korea. New sanctions in place, the ability for the international community to interdict vessels coming from North Korea and look for nuclear materials. The North has said this is a provocative step, has said it would be an act of war. What now?

VICE PRES. BIDEN: We're going to enforce the U.N. resolution. The U.N. resolution is probably the most unifying thing that's been done. Look, this is--North Korea is a very destabilizing element in East Asia. Everyone now realizes that. The Chinese realize it, the Russians realize it. They've gone further than they've ever gone in joining us on real sanctions against North Korea, and it is important that we make sure those sanctions stick. And those sanctions prohibit them from exporting or importing weapons, they allow interdiction of their ships under certain circumstances, they, they--all host countries are, are to deny them portage if in fact they are asked to be boarded and they will not allow that to be happened, if there's good reason to believe they're carrying weapons. And so this is a matter of us now keeping the pressure on. Again...

VICE PRES. BIDEN: Even if they say an act of war. They say a lot of things. This is a fellow and this is a regime that says an awful lot of things. And the truth of the matter is that it is a destabilizing force in the region. There is a coalescing of that conclusion on the part of the Chinese, the Russians, Japanese, South Koreans, Americans like never before. And we are...

MR. GREGORY: What does he want?

VICE PRES. BIDEN: God only knows what he wants. You know, there's all kinds of discussions whether this is about succession, wanting his, his son to succeed him, whether or not he's looking for respect, whether or not he really wants a nuclear capability to threaten the region. There's a whole range of them. We can't guess his motives, we just have to deal with the reality that a North Korea that is either proliferating weapons and/or missiles or a North Korea that is using those weapons or has them mounted on missiles is a serious danger and a threat to the world and particularly in East Asia.

MR. GREGORY: What is the administration doing right now to negotiate the release of those two journalists, Laura Ling and Euna Lee, who are over there now, sentenced to prison?

VICE PRES. BIDEN: I don't think it's appropriate nor in the interest of the journalists for me to discuss that.

MR. GREGORY: But is there activity under way, is there a negotiation under way?

VICE PRES. BIDEN: No, no comment on that.

MR. GREGORY: All right. I want to come back to the issue of foreign policy, a lot to discuss there, but I want to go to the other big test for this administration, and that is, of course, the economy. You are in charge of monitoring the stimulus.

MR. GREGORY: Eight hundred billion dollar stimulus. A hundred days after it was signed, the president said 150,000 jobs had been created or saved. Can you explain where that number comes from?

VICE PRES. BIDEN: Sure. Yes, look, there's an econometric model that, that economists have been using for decades to correlate the economic circumstances of the nation with the creation of jobs. It is a model known as question, it's a model the Council of Economic Advisers have used to come up with that 150,000 jobs. But in fact--and by the way, I think we're going to create 600,000 jobs in the next 100 days, because now this thing is beginning to roll out. We actually have let these contracts, the governors with--who have money for road contracts and so on, they're now just putting spades in the ground, just hiring people. And so I don't know anybody who's argued with the model that we've used. But the key here for us is not whether or not we're going to argue about how many jobs, you know, there, there are out there, it's whether or not are we in fact producing employment for people? And it's undeniable.

MR. GREGORY: But--well, but that's an important point. You say people aren't arguing about that; in fact, they are. I mean, you're suggesting that this is an accepted model.

VICE PRES. BIDEN: Well, no, I...

MR. GREGORY: Your own economic adviser said this on Tuesday: "[Jared] Bernstein, Biden's economic adviser, said in an interview that the president's citation of [saving or creating] 150,000 [jobs] is `an estimate' based partly on what the economy would look like in the absence of the stimulus package. But Bernstein said he could not break down how many of those jobs were created vs. saved. `That's a division we're not able to make at a level of accuracy we're comfortable with.' he said." And now you're talking about another 600,000 jobs. Should America just accept that level of progress?

VICE PRES. BIDEN: Look--yeah. No, no, they shouldn't. Look, whether this is, whether this was 147,000 jobs or 158,000 jobs is not the relevant point. Look, let me put it this way. Prior to us taking office, the job loss for the month was over 700,000 jobs. It's been over 600,000. Since we've taken office the job loss has dropped now to 343,000 jobs; below other people's estimates, below the consensus estimate. Can I claim credit that all of that's due, due to the recovery package? No. But it clearly has had an impact.

MR. GREGORY: But the point of the stimulus was it would stop the unemployment picture from getting worse, right? Wasn't that the claim?

MR. GREGORY: ...that when this report was issued by your economic adviser...

VICE PRES. BIDEN: Yes.

MR. GREGORY: ...and Dr. Romer from the White House, the assertion was that you could keep unemployment at 8 percent and then it would go down after that. In fact, it's now at 9.4 percent. Was it oversold?

VICE PRES. BIDEN: No, look. No. What we did is we took the econometric models that were used by businesses as well as academics. At the time no one realized how bad the economy was. The projections, in fact, turned out to be worse. But it was--we, we, we took the mainstream model as to what we thought and everyone else thought the unemployment rate would be. But the fact of the matter is the--I don't think anyone can dispute the unemployment rate would be considerably higher, but for--at least 150,000 jobs higher, but for this economic stimulus package.

MR. GREGORY: Right. But the, but this package was sold on the premise that it would in fact keep unemployment at 8 percent. It's exceeded that...

VICE PRES. BIDEN: No, no, no, no, no, no, no.

MR. GREGORY: ...with the recovery plan.

VICE PRES. BIDEN: It wasn't sold on that. It was sold on it would create...

MR. GREGORY: That's what the report said, Mr. Vice President.

VICE PRES. BIDEN: ...or--no, it said it would--what would happen was it would save or create jobs. It's doing that. It is doing that. Everyone guessed wrong, at the time the estimate was made, about what the state of the economy was at the moment this was passed. Now, we're going to recalibrate this in terms of what we've inherited, what in fact is going on out there. But look, the bottom line is that jobs are being created that would not have been there before. All you've got to do is go into New York City. There's 14,000 teachers working who got their, got their notices. Go with me up to New Flyer bus company up in Minnesota, come--I mean, there--it's--throughout the country, it's creating jobs.

MR. GREGORY: Regardless, though, the economy is worse off with or without this stimulus plan that this administration expected.

VICE PRES. BIDEN: The economy was worse off when we made the assessment than anyone thought it was. The economy is actually getting better, things are getting better. We have a long, long way to go. But now you see what's happening. We're having a, a situation where housing is starting to improve, where lending is starting to come forward, where we have a situation where we've gained some control of the automobile companies who otherwise would have had to been liquidated in terms of them staying in business and having a prospect of growing. So I think if you ask out there, look--and look at what the, you know, these measures of confidence in the economy are. Everyone feels mildly better about where the economy's going.

MR. GREGORY: One more point about the stimulus, and that is you said when this thing was being debated, most of it would get out the door right away, $800 billion. And yet just this week there were reports about the fact that only 6 percent of that money has been spent so far.

VICE PRES. BIDEN: No, I don't know who said...

MR. GREGORY: Where are the projects?

VICE PRES. BIDEN: ...we're going to get $800 billion out the door in 100 days. We have over 2,000 projects approved. We have now a situation where you have people--you're going to see in the next--and let me--this is an important point. You let a contractor build a highway. It's $42 million, like I was just--did one in the state of Kansas, $42 million dollars. Now what's happened? The governor, the governor gets that approval. What's he doing? Puts it out to bid, competitive bid. It took somewhere between a month and three months to get those bids back. Now the spades are in the ground. Now it's working. That's why we're confidently going to predict that we will increase fourfold what went--and now $150 billion--$140 billion has been obligated now. But obligation requires, then, the states to go forward and get the contracting done according to the rules that they have within the state for competitive bidding.

MR. GREGORY: This administration, this president has said we're going to get America's fiscal house in order.

VICE PRES. BIDEN: Yes.

MR. GREGORY: And yet the only negative ratings this president has are in two areas, the budget deficit and controlling spending. Here's the USA Today/Gallup Poll from just this week. And you see the budget deficit numbers, 48 percent disapproval; controlling spending, 51 percent disapproval. And here's why. Between $800 billion stimulus, bailouts, a promise to do away with the Bush tax cuts, there is a projection of $7 trillion in deficits over 10 years. And then this week the president says, "Look, we're going to be like a typical American family. We're going to start paying for things as we go," only there are big exceptions to that to the tune of $2.5 trillion over 10 years. This was the Washington Post editorial on Friday: "The president's self-congratulatory back-patting about fiscal rectitude is more than a bit hard to take in light of the huge exceptions he would grant. ... Mr. Obama's professions of being willing to make hard choices are belied by his failure to adjust his spending plans to budgetary reality. Something will need to give--either raising significantly more revenue or dramatically scaling back government." Where are the tough choices, Mr. Vice President?

VICE PRES. BIDEN: Look, I'll tell you where the tough choices are. First of all, we submitted our budget, the first honest budget you or anybody's seen in eight years. We put in the budget the cost of the wars, we--which hadn't been done before. We put in the budget the estimate of what's going to be required for natural disasters. We've counted--we, we did it honestly, number one. Number two, this so-called PAYGO which they're talking about, how we're paying for what we're going to do, PAYGO has never included anything other than those long-term programs which are going to have to--we're going to inherit. Like, we had PAYGO during the Clinton administration. We had a good budget, a good budget process. Along came President Bush, he decided we weren't going to pay for the prescription drug program, we weren't going to pay for tax cuts in the future, which were trillions of dollars combined. What we have done is the new programs we have put forward, ie healthcare, we've laid out exactly how we're going to pay for it, exactly how we're going to pay for it. The things that we have not been able to lay out exactly how to pay for it are the things that already are in the law and the Congress has not prepared to take on right now, like the Bush tax cuts, like the prescription drug benefit, which will be affected by our healthcare plan. So what did we do? Unlike anyone else, we laid out there, we said, "This is how much the healthcare plan is going to cost, and here's how we're going to pay for it," and we've laid it out. And we're going to pay for it. Now, the Congress is going to mull over whether or not the way we want to pay for it is the right way. They're either going to have to agree with us, come up with an alternative or we're not going to have healthcare. And we're going to get healthcare.

MR. GREGORY: Well, let's talk about healthcare. Because if there's a fiscal train wreck, in the view of many, you're adding healthcare and insurance for everybody on top of it, which is expected to be at least a trillion-dollar new entitlement. How do you possibly pay for that?

VICE PRES. BIDEN: You pay for it by the way we've laid it out. We pay for it by eliminating some existing tax cuts that are out there, you pay for it by reforming Medicare and Medicaid, you pay for it by getting rid of the Medicare advantage. You pay for it by a whole range of things which we've...

MR. GREGORY: Including raising taxes.

VICE PRES. BIDEN: Including--look, the taxes we're going to--that we propose to raise, to raise $300 billion, says that people making over $250,000 should have the same deduction schedule that they had with Ronald Reagan. Instead of it being 39 percent, it should be 28 percent. That's how we come up with an additional $300 billion.

MR. GREGORY: Right. Will the president sign a bill that taxes healthcare benefits for employees?

VICE PRES. BIDEN: We made it clear we do not think that is the way to go. We think that is the wrong way to finance this legislation.

MR. GREGORY: So if the bill comes with that...

VICE PRES. BIDEN: But--no, no, no.

MR. GREGORY: ...the president wouldn't sign it?

VICE PRES. BIDEN: I didn't say that. I said when the bill is going to come, this is the most--this is going to be one of the most comprehensive changes in law since Medicare in the beginning. We'll have to see what the whole bill says. But we made it clear we do not believe you should be taxing, taxing the benefits that people receive through their employers now.

MR. GREGORY: Will the president sign a bill that does not include a public plan as an alternative to private insurance?

VICE PRES. BIDEN: Again, we've made it clear that we think there should be a public plan. But a public plan is on a continuum. For example, there was a, there, there was a, a big headline saying the AMA says they won't support a public plan and no one will support a public plan. Well, the truth of the matter is the AMA said certain kinds of public plans they might support. So the question is, what is the public plan? Is the public plan just, just Medicare? Is that the public plan? Do you add everybody onto Medicare who is going to need help? Or is a public plan something further down the continuum? And I brought along the quote from the AMA. It says, "The AMA is willing to consider other variations of a public plan that currently are under discussion in Congress. These include a federally charged--or chartered co-op health plan, or level playing field options."

The--here's the reason for the public plan. You've got to have some competition, David. You've got to have some--and by the way, people say there's a lot of--in some states, some regions, there's not a lot of people competing.

MR. GREGORY: Well, you know, Republicans, and there's a lot of Democrats who say this is a nonstarter.

VICE PRES. BIDEN: I know that. But look, if we started off everything we thought we should do by the Congress saying that this is not something we're going to accept...

MR. GREGORY: Right.

VICE PRES. BIDEN: ...and we said OK, we're going to start from, then we'd never get anything done.

MR. GREGORY: So if a bill comes without a public plan, the president doesn't sign it?

VICE PRES. BIDEN: Look, the bill the president is going to--with the bill that comes, the president is going to look at the totality of the bill and he's going to make a judgment, like every president has to have, where the single most--look, what's the reason we need healthcare? The reason we need healthcare is not just moral, it is a fiscal responsibility. We have health care going up over 50 percent per year premiums right now in the last seven years. Up--not per year, 50 percent in the last six years. That, that breaks the budget. That makes us--that keeps us bankrupt for a long time.

MR. GREGORY: The president wants public, a public plan in there.

VICE PRES. BIDEN: He does want a public plan.

MR. GREGORY: Let me just pull back, we've gone through the domestic agenda a little bit, and ask you about where government intervention in this economy stops. The government has a controlling stake in two auto companies, major stakes in the banks, an $800 billion stimulus, new regulatory powers that you're considering, regulation over how executives should be compensated, now big proposals on healthcare and energy. When is it too much?

VICE PRES. BIDEN: Let me tell you--let me ask it another way, if I can turn the question around. How do you--how does anybody think we could possibly lead in the 21st century without a fundamental change in our energy policy, a fundamental change in our healthcare policy and taking control of the reckless, reckless lack of oversight that existed? We just had a meeting at the G-20. We just had a meeting of the world--the world's in recession. What is the one thing they all agreed on, every country that we participated with? We need to have some fiscal--we need to have some control over the system that--so it can't run wild.

MR. GREGORY: But what achievements can you point to, through all of this government regulation and government intervention, that you've achieved?

VICE PRES. BIDEN: David, well, we've achieved not losing about a million jobs by not letting the two automobile companies be liquidated. I love these folks who go out there and say, "Why'd you get involved?" We got involved because the liquidation of these companies, which was the alternative, would have been immediately the next day 100,000 jobs lost, then all the suppliers go bankrupt, then the estimates are of a million people unemployed.

MR. GREGORY: Right. OK, so what's the exist strategy?

VICE PRES. BIDEN: The exit strategy is these--now that these car companies, for example...

MR. GREGORY: Not just the car companies, though.

VICE PRES. BIDEN: OK. Well, I mean, well...

MR. GREGORY: A broad swath of government intervention.

VICE PRES. BIDEN: The exit strategy is that we, in fact--these companies where the United States government, through the TARP funding, has got engaged in helping them stay alive is that they begin--they are retooled, they are beginning to make money. We get the hell, the heck out as quickly as we can. As the president says, we don't want any part...

MR. GREGORY: Do you think...

VICE PRES. BIDEN: ...of running any of these companies.

MR. GREGORY: Do you think the taxpayer's ever going to see money again that we have imported to AIG or GM?

VICE PRES. BIDEN: Yes. Will they see all the money is a different question. Yes, they will see money again.

MR. GREGORY: I want to return to a couple of...

VICE PRES. BIDEN: And by the way, had we not done this, they'd all be in deep, deep, deep trouble. Let all the banks fail, where would we have been? I love these folks who say we shouldn't have done anything. At the time I didn't hear anybody saying that.

MR. GREGORY: But it's still a major question as to whether the government can effectively run these companies.

VICE PRES. BIDEN: Well, we're not trying to run the companies. We've turned over the daily operation of these companies to the boards of directors of these companies. We're not running these companies.

MR. GREGORY: Right. And you don't think there's going to be any meddling by the government or Congress in GM?

VICE PRES. BIDEN: ...look, all the stakeholders, in order to avoid liquidation, if you want us to put taxpayers' money into this, prove to us you have a workable plan. So that's what they did. GM cut out product lines that were redundant. GM began to base their, their, their production models on a 10 million vehicles being sold a year, not 16 million. That got realistic. Everybody sacrificed: labor, debt holders, the company itself.

MR. GREGORY: Mm-hmm.

VICE PRES. BIDEN: And now they have a company that will be coming out of bankruptcy, I predict, within the several months that will be able to compete.

MR. GREGORY: ...in our remaining moments. Israel. Is the president trying to distance himself from Israel in order to assuage the Arabs?

VICE PRES. BIDEN: Absolutely not. Look, here...

MR. GREGORY: If that's the case, then, why is this administration only making unconditional demands over settlements on Israel and on no other parties?

VICE PRES. BIDEN: Well, they are make--we are making demands. We're making demands both today...

MR. GREGORY: Unconditional demands.

VICE PRES. BIDEN: Look, look. The president of the United States, in his speech to the Islamic world and the Islamic communities, stood there and said--and it's a paraphrase, I don't know the exact quote--we are unconditionally tied to Israel. Israel's security is our security was in essence of what he said. So he made it clear we're not distancing ourself from Israel. What we say is that, look, what happened was all the parties signed onto a thing called the road map. It was the thing that everybody said that would bring, result in a two-state solution. The Israeli government signed onto that, the Palestinian Authority signed onto that, the Arab states blessed that. That's what we want to see happen. So we are moving all the parties as best we can toward keeping their part of the bargain.

MR. GREGORY: Yeah. But wait a minute, you were making an unconditional demand only on Israel and no other parties...

MR. GREGORY: What unconditional demand has this president made on the Arabs?

VICE PRES. BIDEN: The unconditional demands we're making on the Palestinians that they have to provide security for Israel. They have to stop this, this, this, this baiting of their populations. They have to stop incitement. We've made it clear to the, to the Arab states, they have to do something more than just talk about normalizing relation with Israel.

MR. GREGORY: Is there moral equivalency in the fight between Israelis and Palestinians, in your view?

VICE PRES. BIDEN: No. No, there's not moral equivalency in...

MR. GREGORY: Did the president suggest there was in his speech?

VICE PRES. BIDEN: I don't believe the president did suggest that. What the, the president suggested is for the well-being of innocent Palestinians and Israelis, that what you need to do is you need a two-state solution along the lines that all the parties had heretofore agreed to, and we're going to use all of our diplomatic capability to move the parties toward actually implementing what they committed to.

MR. GREGORY: You say sometimes you miss the Senate. You are for the first time working where you're not the boss.

VICE PRES. BIDEN: That's right.

MR. GREGORY: You're the vice president. This is a section from "Renegade," the new book by Richard Wolffe called...

MR. GREGORY: About the making of the president. And this is--he described you two meeting during the campaign: "The two formal rivals clicked. Biden didn't want a portfolio like Al Gore; he wanted to be consulted as a confidant and adviser. For his part, Obama liked Biden's political advice and wanted to hear more." Are you as you wanted to be, as you told the president you wanted to be, the last guy he talks to you on a major decision?

VICE PRES. BIDEN: There's not a single major decision he's made I have not been able to get him alone or with one or two other people and make my--as a matter of fact, there's not a decision made he hasn't asked me my view. Whether I am the absolute last person, I can't guarantee that. But I know that I am one of the last people that gets an opportunity...

MR. GREGORY: Mm-hmm.

VICE PRES. BIDEN: ...to make the case to him. And when he has a tough decision and if we're, if he's abroad and I'm, I'm at, I'm here or vice versa, he picks up the phones and he calls. I think he values my opinion. He doesn't have to accept my opinion, but he's kept his end of the bargain. This has been a much better job than I ever anticipated. Look, the biggest deal is I use to sit there and react to Supreme Court nominees. I actually got to be in a position to help choose who the nominee would be.

MR. GREGORY: Mm-hmm.

VICE PRES. BIDEN: It's a difference. It's reactive vs. being proactive. And I like the proactive part.

MR. GREGORY: You've never been--you've never worked this close to a president before. Are you sure you don't want to be one?

VICE PRES. BIDEN: No, no, no. Look, we, we have the order of this operation correct. We got the order correct. He's the president, I'm the vice president.

MR. GREGORY: But you don't want to become president? You won't run?

VICE PRES. BIDEN: Well, I didn't say that. I think I--what, what I said was...

VICE PRES. BIDEN: What I said was I think he's going to be a great president and I think he's off to a great start, and I'm glad to be a part of the team.

MR. GREGORY: But you won't rule it out that you'll think about being president?

VICE PRES. BIDEN: No, I won't. I won't rule that out. No.

MR. GREGORY: OK.

Size up the Republican Party right now. You've got former Vice President Dick Cheney saying this administration is making the country weaker, you have Newt Gingrich saying it'd be better off if it were McCain-Palin, you've got Sarah Palin saying lots of things. How do you size up the Republicans?

VICE PRES. BIDEN: Look, I'll let your two commentators who know this do that in the roundtable after this. I, I just know that there is a ferocious debate, appears to be a ferocious debate within the Republican Party of what they're going to look like in the future. I was elected in 1972 as a 29-year-old kid. My party went through the exact same thing. I ran with George McGovern, we got clobbered nationally, I barely won here. For the next two and half to four years we were in a very intense debate about the future of our party. I think it's predictable. I think the Republican Party will come out of this. I think they'll come back, they'll be strong again. The pendulum swings.

MR. GREGORY: Do you see them really challenging this administration?

VICE PRES. BIDEN: Well, I--well, they are challenging us now. But what I'm saying is over time, just like we did, parties--the good thing about our system is we need two strong political parties.

MR. GREGORY: Right. You know...

VICE PRES. BIDEN: And they'll be strong again.

MR. GREGORY: You know Dick Cheney well. Leon Panetta, head of the CIA, told the New Yorker this about his recent speech: "I think [Cheney] smells some blood in the water on the national security issue. It's almost, a little bit, gallows politics. When you read behind it, it's almost as if he's wishing that this country would be attacked again, in order to make his point. I think that's dangerous politics." Do you agree with that?

VICE PRES. BIDEN: Look, I, I, I learned a long time ago from a guy named Mike Mansfield, never question another man's motive. You've never once heard me in my entire career question a man's motive. I think Dick Cheney's judgment about how to secure America is faulty. I think our judgment is correct. I don't question his motive.

MR. GREGORY: Your son Beau is in Iraq.

VICE PRES. BIDEN: Yes.

MR. GREGORY: Serving America.

VICE PRES. BIDEN: Coincidentally, as I was walking out for this program, he called. I just said--he said, "Dad, keep it short."

MR. GREGORY: We certainly hope he's well. He's also thought about politics. What advice have you given your son about a potential run for the Senate in this state?

VICE PRES. BIDEN: Whatever you decide to do, make sure there's something you're willing to lose over. Don't just do it for--because it's the next step. If you conclude that you care deeply about something that you're willing to lose over it in a campaign, then do it.

MR. GREGORY: Would you like to see him run?

VICE PRES. BIDEN: I think he'd make a great senator. But, you know, I learned a long time ago that with him, anyway, that he is, he's his own man. He had an opportunity to be appointed attorney general, he wouldn't do it. There was even some speculation he had an opportunity to be appointed to the Senate, he wouldn't do it. He decided he had to be with his guys. And so this is--I'm going to say something that people are going to criticize. This is the finest man I've ever known in my life is my son.

MR. GREGORY: Before you go, speaking of people we learned from, Tim Russert.

VICE PRES. BIDEN: Yeah. You know, he was a force. He was a force. I'm wearing my Tim Russert tie that...

MR. GREGORY: I noticed that.

VICE PRES. BIDEN: ...that Maureen sent me, his wife. I got a chance to do Wake Forest commencement that he was supposed to do. And the irony is the only sort of bittersweet thing, David--and by the way, I think you're doing a great job. Presumptuous of me to say that, probably ruin your reputation, but, but, you know, it was a year ago almost to the day I was supposed to be on the program with him. I got--I was supposed to be on that Sunday, and Friday got the call. And it just is still almost surreal. I mean, this guy, this guy was bigger than life. This guy, you know, this guy extended beyond what he did on this show. I mean, it was--and the thing I liked about him best, I liked--as I said to the kids down there at the commencement, when I first met him he was working for Moynahan and I was a young senator. I knew the staff better than I knew the senators. And by the way, I'm four years senior to Moynahan. You know, he had come along after my four years. And I remember him asking me about whether or not I thought--did I ever have any doubts about my ability to do this. He told me the story about Moynahan where he walked in saying, "All these guys with these Rhodes Scholarships and things, and Ivy League schools, I don't know whether or not I can--I should be here." And Moynahan looked at him and said, allegedly--and it sounds like Moynahan--he said, "Look, Tim, you can learn what they know. They can never learn what you know."

MR. GREGORY: Mm-hmm.

VICE PRES. BIDEN: That's the special thing about--that was special about Tim. My mother would say it's an Irish thing. She'd say he had a sixth sense. And he really did. I mean, it was a rare, a rare gift and it's missed.

MR. GREGORY: Mr. Vice President, well said. Thank you very much and good luck with your important work.

VICE PRES. BIDEN: Thank you.

MR. GREGORY: Coming next, how are the Obama administration policies playing out at home and abroad? Two reform-minded Republicans weigh in; Mike Murphy and Joe Scarborough, here only on MEET THE PRESS.

MR. GREGORY: We're back and we're live in Wilmington, Delaware, with Republicans Mike Murphy and Joe Scarborough; who, as it turns out, spend most weekends in Wilmington, apparently.

MR. JOE SCARBOROUGH: Most weekends? I mean, every day I can.

MR. MIKE MURPHY: Garden spot.

MR. GREGORY: Thank you both for, for being here.

Joe Scarborough, what did the vice president say here that we're going to be talking about this week?

MR. SCARBOROUGH: Well, I, I think we're going to have to look at how he described their healthcare plan.

MR. GREGORY: Hm.

MR. SCARBOROUGH: He said it's going to be the most substantial program passed in Washington since Medicare. This is, this is an administration that thinks big. It's why President Obama got elected, but it's also what's causing the problems right now. The--you know, listen. George W. Bush was reckless. He doubled the debts from--our national debt from $5 trillion to $10 trillion. Under this budget, though, they're going to double it from $10 trillion to $20 trillion.

MR. GREGORY: Mm-hmm.

MR. SCARBOROUGH: There's going to have to be some restraint there. They've got a really tough job selling this program in the months ahead.

MR. MURPHY: Yeah. You know, interpreting Biden news is a little tricky because he's not a script guy.

MR. GREGORY: Mm-hmm.

MR. MURPHY: Both to his credit and sometimes to the heartburn of the White House. There are a bunch of guys backstage, they're probably wondering if they're--he was going to make really big news. I thought he did a good job. I heard some tumblers clicking on the padlock to maybe open the door to not a do-or-die fight on the public option for healthcare. If so, that's the big thing.

MR. GREGORY: Mm-hmm.

MR. MURPHY: There's a civil war going on around the Democrats, should the healthcare reform just be about helping people afford private insurance and competition that way, or should they create what I call a killer whale insurance company...

MR. MURPHY: I heard that door open a little, which is a huge Republican victory...

MR. GREGORY: Right.

MR. MURPHY: ...and moderate Democrat victory.

MR. GREGORY: Let's just also address what is the still breaking news out of Iran, and the fact that there is belligerence coming out of Mahmoud Ahmadinejad and the Iranian regime.

MR. MURPHY: Yeah.

MR. GREGORY: And this administration has a real delicate balance here...

MR. MURPHY: Well...

MR. GREGORY: ...which is are you going to engage? And how do you do it now?

MR. SCARBOROUGH: Right. And how fascinating; we heard the vice president--I mean, they've been looking at the numbers. Did you hear the old, the old Irish pol looking at us, saying, "You know, 70 percent of the vote came from urban areas. That's not Ahmadinejad's strong suit." They know these numbers don't add up. I mean, that's a very--I think that's the strongest message this morning. Joe Biden suggested this morning the numbers just don't add up in Iran.

MR. MURPHY: I mean, behind the--he kept referring to the supreme leader, the Grand Ayatollah, who really pulls the strings there. And now the Iranian democracy, the legitimacy is out the window in the eyes of the world.

MR. GREGORY: Right.

MR. MURPHY: So these are bad guys of no good faith. How do you engage with them if obviously they don't mean much of what they say?

MR. GREGORY: Well, and one of the things that they would say, what the president's been saying is look, the--sort of the nicer we are, the more we promise engagement, the more isolated they become. They do--they have suffered some setbacks along the way. The more belligerent Ahmadinejad is is a sign of more isolation. And if they're more isolated maybe they're easy to deal with, because they don't have friends in, in China, or they don't have friends in Russia, necessarily.

MR. SCARBOROUGH: Right. Well, they...

MR. MURPHY: True. But their faith is always...

MR. SCARBOROUGH: Yeah.

MR. MURPHY: ...a part of negotiations, and these guys are the anti-good faith. I think we--there has to be some condemnation now, because we are on the side of the Iranian people that are trying to move forward. We can't be on the side of this regime.

MR. SCARBOROUGH: And how fascinating as I sat there listening to him talk about this, looking at the election results. You know, the law of unintended consequences came in again. I suspect that Cairo speech really scared the grand ayatollahs in Iran. If they were going to fix an election...

MR. SCARBOROUGH: ...this was a time to fix it, because the last thing they wanted to do was Barack Obama to take credit for reformers winning in Iran, like they already have in Lebanon. And, and by the way, in the short-term that's bad news for us. I think in the long-term, though...

MR. GREGORY: Right.

MR. SCARBOROUGH: ...if ayatollahs are seen stealing an election as a result from what Barack Obama did in Cairo, I actually think that's a positive for the United States and Iran in the long run.

MR. GREGORY: Back home, the issue of jobs still the big deal, right? We were sold that this stimulus was going to help the unemployment rate go down and not up. That hasn't happened. Hundred and fifty thousand jobs created or saved, another 600,000 jobs are going to be created or saved. I mean, would the Democrats be accusing Republicans in this position of fuzzy math here, Joe?

MR. SCARBOROUGH: Well, it is fuzzy math. I don't think anybody should expect a stimulus plan to turn the economy around in five months, six months. I think the mistake the administration's making right now are coming up with these matrixes saying "we've created 150,000 jobs." You have? "Well, we haven't lost 150,000." There's--I think there's an impatience, and for good reason. Americans, if you read the Washington Post story today, talked about Americans are becoming impatient all of this spending, with all the deficits. You showed the numbers in the Gallup Poll. They understand they've got to bring voters something in 2010...

MR. GREGORY: Yeah.

MR. SCARBOROUGH: ...or they're in trouble.

MR. MURPHY: Yeah. I felt sorry for the vice president. He had to do about five minutes of ecometric modeling voodoo.

MR. MURPHY: There's only one number that counts, how many people are out of work. It's the highest in 25 years, 9.4 percent.

MR. GREGORY: Right.

MR. MURPHY: It is going up, not down. And the other scary number, in the last three weeks the average mortgage interest rate is up 10 percent with--you know, the number's gone from the mid-fours to the low fives.

MR. GREGORY: Right.

MR. MURPHY: So two simple kitchen table numbers going exactly the wrong way. I think in hindsight the political side of this for the Republicans is going to be...

MR. GREGORY: Right.

MR. MURPHY: ...there could have been a much more effective stimulus package by cutting payroll taxes, things that would have put money right into the regular economy fast, not pork or you're out paving roads that sometimes aren't even needed.

MR. GREGORY: All right, we're going...

MR. SCARBOROUGH: And that's the big problem. I mean, for the president, politically, the big problem is he had to turn this bill over to Nancy Pelosi. This was Nancy Pelosi's stimulus package, and that's going to cause problems in the long run. But again, it's too early to, to suggest that unemployment is going to be dropping. I think voters will give him another six months to a year.

MR. GREGORY: All right. Well, let's talk about where the Republican road map picks up in terms of reaction to the Obama administration. We're going to do that. We're going to take a quick pause here, however. We'll continue our roundtable discussion after this brief station break.

(Announcements)

MR. GREGORY: And we are back with our roundtable: Mike Murphy, Joe Scarborough.

Joe Scarborough, the new book is called "The Last Best Hope," and it is a real thoughtful examination of where the Republican Party is and where it should be going. This is what you write, page 234: "I told [2006] Republican candidates that if they wanted to remain in the majority, they would have to admit to voters that the [Bush] White House had been reckless with taxpayer dollars. ... Our president was wrong to believe that the United States could fight two wars, cut taxes, and increase federal spending, all at once. Once again, Republican candidates choose Republicanism over conservatism. They chose instead to remain silent. The result was a political and economic disaster we will be paying for over the next generation." What's that difference between Republicanism and conservatism?

MR. SCARBOROUGH: Well, conservatism believes in restraint; believes in restraint in federal spending, believes in restraint in foreign policy. We don't engage in military adventurism, we don't try to do everything all at once. Conservatism is about choices, tough choices. My first book I wrote back in '04 that Republicans hated I talked about it. We got to make a choice.

MR. GREGORY: Mm-hmm.

MR. SCARBOROUGH: That's what conservatives do, they conserve. And so George W. Bush didn't make those tough choices, and now we find ourselves--because of our mistakes, now we find ourself in an era where we've got another administration making no choices. They are--they are getting the federal government more involved, they're trying to do everything all at once and they're taking a bad situation left by Republicanism and making it twice as bad, making it a lot worse.

MR. GREGORY: Well, that's an interesting point because, Mike Murphy, how, if you're a Republican right now, do you mount...

MR. MURPHY: Right.

MR. GREGORY: ...the challenge to President Obama on the backs of that record and say, "Oh, no, but you guys, you should trust us again with the country's finances"?

MR. MURPHY: Well, in practical politics the only move you have, shamelessly attack. Because the truth is in most elections you don't want to debate the past. The Republicans should say, "We made these mistakes and we've learned from them." He has taken our mistakes and he's put them on steroids. Because he has. You can fight out that case and win it on the facts. He is going to explode the federal debt like we could not even have imagined in American politics a decade ago. And so I think the Republican Party still has fiscally conservative instincts. The problem is, as Joe said, all politicians like to appropriate and nobody likes political pain when it comes to spending cuts. But I think we've reached a tipping point in American politics where the Republicans can start to define themselves as the party with the courage to say no.

MR. GREGORY: Right. But here's the thing. This is a--this still is a nuance game, you know, because the conservatives now say, "No, no, no, we got to be a free market people. Get out of the market."

MR. MURPHY: Right.

MR. GREGORY: "All this intervention, you're owning the economy, this isn't capitalism anymore." Sarah Palin says it's an approach towards socialism. There has to be a balance here.

MR. MURPHY: Yes.

MR. GREGORY: And the question is, is the balance out of whack? Joe:

MR. SCARBOROUGH: Well, there has to be a balance. And that's the problem over the past eight years, you had Republican appropriators giving a Republican president absolutely everything he wants.

MR. MURPHY: Yeah.

MR. SCARBOROUGH: Now you've got Nancy Pelosi and Barney Frank giving Barack Obama and Rahm Emanuel everything that they want, and it's very frightening. There is no balance, there is no restraint and it's very dangerous. And again, just very quickly, I criticized George Bush from doubling the debt from $5 trillion to $10 trillion. Barack Obama's going to double it from $10 trillion to $20 trillion according to his own numbers. Using 4 percent, talk about 4 percent growth, it's the rosiest of scenarios.

MR. GREGORY: Right.

MR. SCARBOROUGH: We are in dangerous, dangerous times.

MR. GREGORY: This--we're talking about ideas, but we also have to talk about the faces who are going to carry this forth. This is what you write, Mike Murphy, in your Time magazine column: "Despairing Republican friends have been asking me what I think we should do to rebuild the GOP and begin our certain and inevitable comeback. My answer disappoints them: `Build an ark.' ... The numbers tell a clear story; the demographics of America are changing in away that is deadly for the Republican Party. A GOP ice age is on the way." And before you address inside the numbers, I was at my son's soccer game yesterday, a guy approaches me and he said, "What are you doing having Newt Gingrich on? This guy is the past. We don't want to see those guys anymore." And yet is he among those who's really influencing the way forward?

MR. MURPHY: Well, yeah, he is powerful force. We're kind--it's kind of Russia in 1919. You know, you have 20 warlords in the Republican Party running around and nobody is really in charge. That's the consequence of losing an election. And we're going to have a big discussion now about he future of the party, which can be a very good thing. What I'm trying to do as a practical pol in all this is get the discussion focused on the reality of America. The demographics are changing. The Hispanic vote, the fastest growing vote, 2 percent in 1980, 9 percent now, heading quick to 15, is totally anti-Republican. We lose it 2-to-1. Number one male baby name in Texas now, Jose. That's the--Texas is the key to our Electoral College numbers. So the point is, I don't want to dilute conservatism, but I want to modernize it. And I think everybody having this discussion needs to understand that the country's changing. The young vote doesn't like us, it's much more social libertarian than we are. The anti-immigration stuff has been a big mistake, you can't alienate the fastest growing vote in the country. So I want all of us who are trying to figure out what kind of conservatism to present to the country, the idea is not just--spokesmen come and go.

MR. GREGORY: Right.

MR. MURPHY: It's the big ideas that count. To understand that we have to evolve with the country or it will be a ice age.

MR. GREGORY: Right. Right. But spokesmen come and go, you need a candidate. And one of my...

MR. MURPHY: Yeah, and we'll get one. I mean, we're having primaries.

MR. GREGORY: Right. Sarah Palin, I mean, one of the--this week she made news taking on David Letterman over his jokes against her daughter. Is that what she wants to be doing right now? Is that a smart move to put herself front and center?

MR. SCARBOROUGH: Well, no, I don't think so. I, I also don't think that we win the middle of America again by being intemperate, by calling Barack Obama a communist or by calling Sotomayor a racist. I mean, what we've got to do, we find the middle of American politics by talking about ideas, conservative ideas. I, I, I differ a little bit with Mike Murphy, who I think should be put in charge of rebranding the Republican image, good luck. Put a nice logo on...

MR. MURPHY: I've retired. I work in Hollywood now.

MR. SCARBOROUGH: Put a nice logo on the side of the ark. But we, we need, we need to understand that we, we've got to go back to first principles.

MR. GREGORY: Mm-hmm.

MR. SCARBOROUGH: And again, that's restraint. Restraint at home, restraint abroad. We'll, we'll write the script again and then we'll figure out who Murphy wants to put in to be the lead actor for that play. But we, we can't run around, again, picking fights with late-night comics or calling Sotomayor a racist. That's going to lose votes for us.

We're going to continue our discussion online and ask Mike and Joe some questions that our viewers have submitted via e-mail and Twitter in our MEET THE PRESS Take Two Web extra. Plus, read an excerpt from Joe's book "The Last Best Hope: Restoring Conservatism and America's Promise." And look for updates from me throughout the week. It's all on our Web site at mtp.msnbc.com.

A final note here when we come back.

(Announcements)

MR. GREGORY: Finally this morning, remembering Tim Russert. Our friend, mentor and colleague died a year ago this week. While there is still a big hole without him, those of us who worked alongside Tim don't feel alone. He's here, still teaching by example, still offering the lessons of a full life we can emulate. As the columnist Peggy Noonan wrote after his death, "Tim's many virtues were his parting gift." And I can tell you, they keep on giving. Tim is in God's arms now. His memory is a blessing. Our job, just like he would always say, keep it going.

That's all for today. We'll be back next week. If it's Sunday, it's MEET THE PRESS.